Successful real estate investors know that nothing less than a forensic report on a potential project is in order. Two if necessary.  There’s a lot of talent thrown at a property to determine if there’s a profit to be had and if so, how much and whenresearch property liens. The real estate agent can predict a future value based upon the needed repairs and provide a solid “days on market” number to see how long it will take to sell the project.

 The contractor will provide an estimate of the amount, type and cost of repairs that will be required to prepare the property for market. Buy price, cost of rehabilitation and selling price. That’s it, right? Actually not even close.

You need to pull in your attorney or title agent. Certainly acquisition and rehabilitation costs are critically important but there are also expenses that are hidden from a physical inspection. Those items are back property taxes, judgments and liens against the property and the only way to expose those liens to light is by a thorough review of an updated title report.

If the property has a mortgage on it, before the property can be sold the mortgage has to be paid off at the settlement table before the unit can be transferred to the new owner. Yet other liens filed against the home must be addressed as well. If there are any back property taxes, those must be paid. If there is a tax lien certificate filed then the owner of that lien must be paid off as well, along with accruing interest and fees. Did the current owner wind up on the wrong end of a lawsuit? Then there could be a financial award to the plaintiff and a subsequent lien that must be satisfied. Oh, don’t forget delinquent property taxes, either.

A potential flip at first glance might seem to be a profitable venture after a couple of property inspections, but without looking at the title report, you’re only looking at the half of it.